Three kinds of obsolescence, and the cause tells you which
A worked RES examination question on obsolescence and depreciation, from our Paper 1 bank — with the rule it turns on, and why each of the four options is right or wrong.
The question
Madam Sng's terrace sits beside a plot the State has just rezoned for a viaduct. Mr Ariffin's 1960s flat has five bedrooms and a single bathroom, which today's families reject. A third owner's walk-up block has been neglected so long that repair would now cost more than demolition and rebuilding.
Consider the following statements.
- (i) The loss on Madam Sng's terrace arises from a change beyond the boundary of her land.
- (ii) All three losses share a single cause and would respond to the same remedy.
- (iii) The loss on the neglected walk-up could have been slowed by regular upkeep.
- (iv) The loss on Mr Ariffin's flat arises from its internal layout rather than its condition.
The answer, and why
Answer: A
The rule. Three kinds of obsolescence, and the cause tells you which. Economic (external) obsolescence comes from a change outside the boundary and cannot be cured by the owner. Functional obsolescence comes from design, layout or size being out of step with the market. Physical obsolescence is wear and decay, and it is the one regular maintenance slows.
Why A is correct. - (i) True. The rezoning is on a neighbouring plot, beyond Madam Sng's boundary. She cannot cure it by anything done to her own terrace. Economic. - (iv) True. Five bedrooms and one bathroom is a layout problem, not a condition problem. The flat may be in perfect repair and still unsellable. Functional. - (iii) True. Repair costing more than rebuilding is the end state of untreated decay, and decay is what upkeep addresses. Physical. - (ii) False. The causes sit in different places — outside the boundary, in the design, in the fabric — and only the third responds to maintenance.
The other options.
- C and D carry the false (ii), which is the point of the question; D additionally asks you to accept that a rezoning and a bathroom count share a remedy.
- B drops the true (iii), the most commonly doubted of the three because maintenance sounds too modest to name as an exam answer.
Exam note. Locate the cause and the type names itself: outside the boundary → economic; in the design → functional; in the fabric → physical. Only the last is curable by upkeep.
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